The IEA released preliminary 2021 data that shows that spiking prices for critical materials are undermining the year-on-year reductions in technology costs that have thus far been driving growth in clean energy uptake.

The IEA released preliminary 2021 data that shows that spiking prices for critical materials are undermining the year-on-year reductions in technology costs that have thus far been driving growth in clean energy uptake.

IEA data shows that cathode materials costs have increased from less than 5% of the overall lithium-ion battery pack in 2016 to over 20% in 2021. Meanwhile, the average cost for solar photovoltaic modules and wind turbines increased in 2021 reversing decades of year-on-year cost reductions. In response, the IEA announced plans to increase its systematic market monitoring and to launch a comprehensive database of critical mineral supply policy measures.

Project Blue’s Critical Materials Price Basket Index for April 2022, published in our Critical Materials Monthly, showed a year-on-year price increase of 45% across 30 critical materials. The critical materials driving automotive, batteries and magnet & motors doubled in price over the last 12 months, including a more than 5-fold increase in the price of lithium.

Supply tightness, geopolitical tensions, supply chain disruptions, market sentiment and speculation have all helped drive prices to record levels over the past 18 months. Concerns remain that material prices and availability will begin to choke both new and planned clean energy investment as costs begin to outweigh potential returns.